A contractor undertakes to carry out the work and charge the client whatever it costs, plus a mark-up for overheads and profit.

An employer must pay whatever it costs, subject to negligence or fraud.

An employer does not need to have a complete specification.

An employer bears the risk of inflation and costs escalation.

A contractor does not need to build a contingency into their price.

A GMP may put a lid on the employer's cost risk.

A contractor can start work at once, with no lengthy tendering process.

Appropriate where the scope of work cannot be defined clearly, such as R&D work and military contracts.

It can be used for construction contracts, best for jobs such as repairs where the extent of the necessary repairs is not known at the date of the contract.

An employer does not select a contractor on a price base but can concentrate on reputation, expertise and experience.

Cost-Plus Contract: Also called Cost Reimbursable. The contractor is paid for the work, plus a mark-up for overheads and profit.

Fixed Price Contract: The contractor gives a fixed price for a fixed scope of defined work.